Wiggle World's Biggest Bike Shop

Phew, Wiggle confirms that it is the Number One bike Shop

On the last blog post, we asked whether Chain Reaction Cycles had returned back to the top place as the worlds number one bike shop after their 2014 turnover was released and the term largest bike store used by media as well as themself. 

You never doubted that Wiggle would lose their lead, and their financial data is out – according to Bicycle Retailer (US trade publication), Wiggle has £179 million in sales in 2014 compared with £153 million for Chain Reaction Cycles (CRC). The most important metric is turnover, so Wiggle retains the claim of being the world’s biggest bike shop.

We reported that Wiggle list 12,000 products which is based on their inventory which is available to Smart Cyclist. This is just a fraction of the 66,000 products from CRC. Bicycle Retailer however reports that Wiggle have 50,000 SKUs – which are Stock Keeping Units, but again this doesn’t provide enough information to accurately use and compare because of product variations such as colour and size. For example, if Wiggle have 12,000 products and with variations there are 50,000 units, CRC have 66,000 products – but are these the ‘units’ and variations or are there four times the number of SKUs? This is not clarified.

While information for public release is generally carefully considered, and thus tends to be scarce, the report does however provide insights into sales in different territories.

…sales were up 26 percent in the U.K. and 20 percent in Europe over the period, but down 13.1 percent in the rest of the world.

Certainly currency exchange has a role, but also competition from the growing number of online retailers now servicing local markets (who can be competitive and offer even faster delivery).

What is interesting is the growth, CRC had 6% growth while Wiggle recorded 12% growth which is certainly a reflection on their continuing commitment to brand promotion and awareness.

Shhh Shimano

Is ‘Shimano’ a naughty word?

There are so many good things to say about the Shimano brand in the world of cycling (not to forget, they are big in fishing). Even if you you have a budget Shimano groupset, it will still be well designed and will continue to perform as long as you look after it. And Shimano has also lead the component market without the teething problems that have held back SRAM or the chains of nostalgia which hold back Campagnolo.

Customers are happy, but a lot of bike shops and even their own national Shimano suppliers are having second thoughts. So why the discontent, it is the legacy of Shimano distribution which allows the European online bike shops access to super cheap wholesale pricing.

The Bike Dealer Blog recently published a blog post, The “S”-Word: Dealers Speak Out and discussed the American perspective of the Shimano distribution strategies;

Shimano American management claimed it cannot do anything to control European distribution, a part of the world that doesn’t allow MAP or MAP enforcement.

An example is given of a California bike shop owner who complains that the Shimano 105 5800 groupset is available online from European retailers for $382.49 while his wholesale purchase price is $500.

This scenario is similar in other countries with not online the bike shops, but also the Shimano national offices facing stiff price competition from their own brand, and little power to act for fear of being cut-off.

The Bike Dealer Blog quotes a Texan bike shop owner (which I assume is unrelated to the ex-seven time Tour de France winner),

Here’s the problem. Which bike company wants to bankrupt itself to make a point? You can’t avoid using Shimano components on your bike. You can’t even work on phasing them out, except at the low end, and if you try to do that, Shimano will strike back by making their parts cheaper and thus your competitor’s bikes a better value.

For a bike dealer to shift to SRAM or Campagnolo also involves its own challenges. Aside from missing out on the strong “Shimano” brand and having to service this brand anyway, what is stopping SRAM and Campagnolo from also tapping into the lucrative European internet retailer market?

While the European online bike shops are branded with the blame for killing local bike industries, and while the distributers and bike shops call their customers ‘heartless’ for buying online, it is the brands themself who have ultimate control. These big brands however have been caught by surprise at the power and speed of the internet and the subsequent price discrepenies which make customers happy and bike shops unhappy are a legacy of deals and arrangements which can’t be changed overnight.

For young brands the lesson is to establish globally consistent pricing which ensures that bike shops and distributers can compete on price. And consistent pricing makes customers happy, they no longer pay a ‘massive local premium’ for the same item.

Has Wiggle just beaten Chain Reaction Cycles to the top spot?

Cycling Weekly reports that Wiggles yearly sales have soared 19% in 2013 which increases their turnover from £141 million in 2012 to £168 million.

In our early reports on the turnover of Wiggle and Chain Reaction Cycles we noted that CRC reports a 2012 turnover of £170 million and while their 2013 profits have risen, their turnover has dropped 6% to £145 million.

Wiggle Chain Reaction Cycles

CRC turnover discrepency in reports
The BBC article also note sa CRC 2012 turnover of £156 million, lower than we have originally reported, but confirmed by other media such as bikebiz. Our original source for the reported £170 million is a 3rd party service provider called Export Technologies who reported in a Chain Reaction Cycles Case Study:

From 2008 to 2012, Chain Reaction Cycles tripled its online revenue, finally reaching over £170m in annual turnover by the end of 2012. Roughly two thirds of these sales came from outside the UK.

Wiggle is now the number 1

But the good news for Chain Reaction Cycles is that it has increased on it’s 2012 profit £861,000 with a healthier 2013 pre-tax profit of £4.8 million which the company attribute to “improved sales margins and ‘significant overhead cost savings'”.

The 2013 profit for Wiggle is not yet available however in 2012 they recorded a pre-tax profit of £12.3 million and have noted that they have strong investments (costs) as the Team Wiggle Honda sponsor and overseas investment such as their first overseas office in Sydney, Australia.

Look out for End-Of-Season specials on Bikes and Gear

Many of the big brands have already announced their 2015 bikes or cycling gear and products. You will even find some bike shops stocking next years gear. The fact is, new is sexy and for some strange reason, next seasons gear or next years gear always looks better.

The other fact is, most of us are not performance cyclists and the one percent saving will make zero percent difference (just don’t tell the marketing departments). The real effect is that often last season’s bike or gear may be substantially reduced and you could save hundreds of Dollars, Pounds or Euros for a bike which is almost the same as next years model.

Some brands are trying to buck the trend by removing the ‘year’ and ignoring seasons as a bike model generally has a life span exceeding one year. Often after a few seasons (and a few paint jobs and accessory changes later), a top model bike may be relegated and replaced, but still remains in the program as it was a good bike.

Bike shops need to clear their floor stock and/or warehouse stock for the new gear so you need to keep your eye open from between October and February, more specific time-frames will depend upon your country’s sale trends as well as the individual brands time frames for supply. Don’t be afraid to ask “when do you expect the new bikes in?”

Online retailers however may have different cycles when it comes to new season gear. Local bike shops are often first inline and online retailers are second-in-line as they are the ‘clearing houses’. This means that online retailers may get new season stock much later however once again, it depends upon the brands and their relationship with the retailer.

The bottom line

If you chose last year’s bike or gear, the chances are that the savings you make over the new year and new season equipment are far great than the difference in performance benefit. Of course there may be differences and the new gear is new – so if you want New and can afford New, go for it.

Who is the biggest online bike store?

Easy, Chain Reaction Cycles which is based in Northern Island (United Kingdom) is the world’s biggest bike store  and reported a 2012 turnover of £170 million and are a top 10 UK online retailer. They are followed by Wiggle who have a smaller but enviable 2012 recorded turnover of £140 million.

In 2011 Chain Reaction Cycles reports sales outside of the European Union at 39% which is £66 million. For more information, a case study by a supplier provided more historical and financial information: Export Technologies: Chain Reaction Cycles Case Study

The leading bike shop shares their formular for success:
Traffic x Conversion Rate x Average Order Value = SALES
*Turnover values vary from source to source, some values provided are much lower however Chain Reaction Cycles leads.